There follows a brief summary of some of the benefits afforded to companies incorporated under the provisions of The International Business Companies Act 1989 ("the Act") which was enacted with a view to enabling The Bahamas to more effectively compete with other tax haven jurisdictions having similar laws.
The International Business Company ("IBC"), being tailored for the offshore market, is precluded from engaging in certain activities such as doing domestic business with, residents of The Bahamas, owning real property in The Bahamas or carrying on banking, trust, or insurance business or the provision of registered office facilities. In such cases an ordinary company under the Companies Act ("a Domestic Company") will be appropriate. In addition, an IBC must have a Registered Office and Registered Agent in The Bahamas.
Incorporation within 24 hours
Incorporation is immediate upon lodging the requisite documents with the Registrar of Companies. The Certificate of Incorporation is usually issued within 24 hours of filing. Furthermore, proposed company names may be approved and reserved in advance over the telephone.
Any of the words 'Limited', 'Incorporated', 'Corporation', 'Societe Anonyme' or 'Sociedad Anonima', or their respective abbreviations, can be used to denote the compulsory indication of limited liability.
Only one Director/Shareholder required
Although a minimum of two subscribers to the Memorandum are required upon the initial incorporation, once incorporated, an IBC may operate with a single shareholder. Also, there need only be one director/officer of the Company who may be a citizen of any country. All of the foregoing capacities may be filled by a corporate entity rather than an individual if desired.
The Act allows an IBC to engage in any lawful activity thereby avoiding the use of lengthy objects clauses as a means of circumventing the now obsolete doctrine of 'Ultra Vires'. Nevertheless, restrictions upon the objects of an IBC may be included in the Memorandum if desired.
Simplicity of Operation
There are no financial or other returns required in respect of an IBC, nor is it necessary for an Annual General Meeting of shareholders to be held. Directors' meetings may be held anywhere in the world, and may be conducted by telephone.
Broad Capital Structure
An IBC may issue registered or bearer shares, and holders of either can convert such shares into the other type. Shares can be issued with or without par values and in fractions. Certificates need not be issued in respect of registered shares. Capital can be expressed in any currency, and,subject to certain restrictions, reduction of capital can be achieved by the simple expedient of a Directors' resolution, without court sanction. The purchase and ownership by an IBC of its own shares is also permitted but only out of surplus or in exchange for newly issued shares.
No public record is maintained as to the identity of shareholders or directors and the Share Register may be kept in electronic form.
Inexpensive to operate
Fees are considerably lower than for Domestic Companies -Fee schedule available upon request.
Exemption from Taxes
There is a guaranteed 20 year exemption from any corporation tax, from any taxes on income or distributions, and from the provisions of the Stamp Act in relation to such matters as transfers of the Company's property, transactions in respect of its shares, debt obligations or other securities, or other transactions relating to its business.
The Act also seeks to render some protection from the long arm tactics of foreign revenue laws in that application may be made to the Bahamas Courts for an order that an IBC :
(i) disregard the action of a foreign government which expropriates or imposes confiscatory taxes on the shares or other interests of an IBC; and
(ii) treat as members or interested holders those persons whose shares or interest are subject to the action by the foreign government. Furthermore, corporate domicile can be changed to another jurisdiction.
Exemption from Exchange Control Regulations
The IBC is similarly exempt from Exchange Control Regulations and no reference at all need now be made to Bahamas Exchange Control, either in connection with the formation of, or the shareholding in, the IBC. The IBC is also free to open and operate foreign currency bank accounts without recourse to the Central Bank of The Bahamas.
Conversion of an Existing Company into an IBC
Both Domestic Companies and foreign companies may be continued as IBCs, in the latter case, without the need for reciprocal arrangements with the jurisdiction of original incorporation.
Merger & Consolidation
Merger and consolidation may be achieved between two IBCs (including a parent with a subsidiary) or between an IBC and a Domestic Company or a foreign company provided, in the latter two cases, the surviving entity meets the requirements of an IBC.
Ideal Investment Vehicle
The IBC may be utilized in conjunction with a trust, as the ownership vehicle for the assets of the trust, with the IBC shares vested in the trustees.
This memorandum is intended for the general information of our clients, and should not be treated as a substitute for obtaining specific legal advice upon the law as it applies to the facts of an individual case.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.